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What does cyber insurance cover?

Cyber insurance covers the losses relating to damage to, or loss of information from, IT systems and networks.

It covers a direct (or first party) financial loss to you or your business arising from a cyber event. A cyber event is simply any actual or suspected unauthorised IT system access, electronic attack, or privacy breach. The vast majority of financial losses are first party loss and include theft of funds, theft of data and or damage to digital assets.

Cyber insurance covers the liability actions that might be brought against you, arising out of a cyber event (third party loss), such as investigation and defence costs, civil damages, compensation payments to affected parties.

Cyber insurance also generally includes significant assistance with and management of cyber incidents both before and after an incident has occurred.

To protect you from these losses, cyber insurance policies usually cover the following:

Pre-incident support

Cyber insurance can assist you with managing your cyber risks and preventing cyber incidents from occurring. Insurers can offer access to cyber security expertise and threat intelligence services, conduct IT vulnerability assessments, offer staff training on cyber security and help with password management.

Security & Privacy Breach Costs

This is one of the largest and most critical sections to look for in a cyber insurance policy. It will cover your business for costs arising from dealing with a security breach. For example, notifying customers of a cyber breach, the costs of hiring a call centre to answer customer enquiries, the costs of public relations advice, IT forensic costs, any resulting legal fees or the costs of responding to regulatory bodies.

It will also cover your business against claims of infringement of privacy and associated legal costs in the event of a breach. Usually, this cover not only provides for payments to legitimate claimants but also the legal and regulatory defence costs arising from a privacy breach. This form of cover is especially relevant for businesses that handle or store any personal information from their customers.

Post-incident support

Post-incident support (also known as cyber forensic support) is usually included by insurers as standard. In the event of an IT failure or cyber-attack, this will provide your business with rapid 24/7 support from cyber specialists recommended by your insurer in the period following a cyber incident. These specialists are able to assess your systems, identifying the source of any breach and suggesting preventative measures for the future. In addition, this support can often include advice on your legal and regulatory requirements as well as what steps to take to notify your customers of a data breach.

Cyber Extortion

Cyber extortion cover protects your business in the event of ransomware and other malicious attacks. These attacks attempt to seize control of, and withhold access to, your operational or personal data until a fee is paid. This cover will typically provide for a reimbursement of the ransom amount demanded by the attacker as well as any consultant’s fees to oversee the negotiation and transfer of funds to solve the ransom request. Cyber extortion cover is especially relevant for businesses that operate online, particularly as the use of ransomware proliferates.

Paying an attacker to unlock your systems should not be the first course of action. Before any decision to pursue this course of action, you should report the matter to the police and also speak with your insurer to establish the conditions for them paying any cyber extortion expenses. Upon the resolution of a ransomware attack, your business should then look to repair the breach and improve security.

Damage to digital assets

This cover protects your business from damage to digital assets, such as your website or photos. It provides protection against the loss, corruption or alteration of data as well as the misuse of computer programmes and systems. Asset replacement expenses are especially relevant for firms that rely on online business models or on automated manufacturing systems where an incident could inflict significant damage to business operations.

Business Interruption

This is an important aspect of most cyber insurance policies. If an IT failure or cyber-attack interrupts your business operations, insurers will cover your loss of income during the period of interruption, including if this is caused by increased costs of conducting business in the aftermath of the incident. This can be a critical safety net as you look to recover your normal working pattern.

Liability Costs

Cyber insurance can provide cover for a business in the event that your digital media presence leads to someone bringing a claim against your business for libel, slander, defamation or the infringement of intellectual property rights. This cover is especially pertinent for companies that rely on the transmission of digital data via email or a website, rely on a large social media or digital content creation business model, or have significant advertising on their site that may lead to a liability.